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Chapter 6

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State & Local Govt - Long-term Liabilities and Debt Service

Frage 1 von 28

1

Which of the following basic financial statements contains a column for the total of all debt service funds?

Wähle eine der folgenden:

  • Statement of cash flows.

  • Statement of revenues, expenditures, and changes in governmental fund balances.

  • Statement of revenues, expenses, and changes in proprietary net position.

  • No basic financial statement contains a column for the total of all debt service funds.

Erklärung

Frage 2 von 28

1

Which of the following financial statements are required for a Debt Service Fund?

Wähle eine der folgenden:

  • Statement of net position only.

  • Statement of revenues, expenditures, and changes in fund balances only.

  • Balance sheet and statement of revenues, expenditures, and changes in fund balance.

  • Balance sheet, statement of revenues, expenditures, and changes in fund balance, and statement of cash flows.

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Frage 3 von 28

1

General obligation bonds issued for the benefit of enterprise funds, with the intent of paying bond principal and interest from revenues of the enterprise fund, should be reported as a liability in the balance sheet of the

Wähle eine der folgenden:

  • Enterprise fund.

  • Governmental activities.

  • Both the enterprise fund and the governmental activities accounts.

  • Enterprise fund and a disclosure is added to the financial statement notes explaining the contingent liability of the general government if enterprise funds are insufficient to pay principal and interest.

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Frage 4 von 28

1

Which of the following resource inflows would be recorded as a revenue of a debt service fund?

Wähle eine der folgenden:

  • Property taxes levied by the debt service fund for debt service purposes.

  • Receipt of the premium on a new bond issue.

  • Taxes collected by the General Fund and transferred to the debt service fund.

  • Transfer of the residual equity of a capital project from a capital projects fund to the debt service fund.

Erklärung

Frage 5 von 28

1

Interest expenditures on bonds payable should be recorded in a debt service fund

Wähle eine der folgenden:

  • At the end of the fiscal period if the interest due date does not coincide with the end of the fiscal period.

  • When bonds are issued.

  • When the interest is paid.

  • When the interest is legally payable.

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Frage 6 von 28

1

The liability for general obligation bonds should be recorded in the

Wähle eine der folgenden:

  • General Fund.

  • Capital projects fund.

  • Governmental activities journal.

  • Debt service fund.

Erklärung

Frage 7 von 28

1

The city of New Haven issued $20 million of tax-supported bonds at 102 to finance a new prison. Upon issuance, how will the premium be recorded?

Wähle eine der folgenden:

  • A $400,000 revenue to the capital projects fund and a $400,000 revenue in governmental activities.

  • A $400,000 revenue to the debt service fund and a $400,000 premium on bonds payable in governmental activities.

  • A $400,000 expenditure in the debt service fund and a $400,000 expense in governmental activities.

  • A $400,000 other financing source to the debt service fund and a $400,000 premium on bonds payable in governmental activities.

Erklärung

Frage 8 von 28

1

Which of the following statements is not true for debt service funds?

Wähle eine der folgenden:

  • Special assessment debt for which the government has some obligation is paid through the debt service fund.

  • Interest payable is reported as a liability of the debt service fund.

  • Bond principal is shown as a liability of the debt service fund only when that principal is due and payable.

  • All tax-supported bond principal is shown as a liability of the debt service fund.

Erklärung

Frage 9 von 28

1

Which of the following debt service funds would normally have the largest balance in its Fund Balance account?

Wähle eine der folgenden:

  • Serial bond debt service fund.

  • Deferred serial bond debt service fund.

  • Irregular serial bond debt service fund.

  • Term bond debt service fund.

Erklärung

Frage 10 von 28

1

Which of the following is a true statement regarding in-substance defeasance of bonds?

Wähle eine der folgenden:

  • The government must place cash or other assets in an irrevocable trust sufficient to pay all future interest and principal payments for the debt being defeased.

  • The government must agree to maintain sufficient cash and investment balances in its debt service fund to cover all interest and principal payments for the debt being defeased.

  • The government must pledge to transfer amounts to an escrow agent prior to the due date for each interest and principal payment for the debt being defeased.

  • The government must agree to maintain sufficient unrestricted cash and investments in its governmental funds to cover all interest and principal payments for the debt being defeased.

Erklärung

Frage 11 von 28

1

Which of the following liabilities is properly reported in the Governmental Activities column of the government-wide statement of net position?

Wähle eine der folgenden:

  • Tax-supported general obligation bonds.

  • The long-term portion of compensated absences.

  • The long-term portion of judgments and claims.

  • All of the statements are correct.

Erklärung

Frage 12 von 28

1

Jasper City issued $10,000,000 of bonds for a new water pumping station. Payment of principal and interest on these bonds will be made by the Water Utility Fund, an enterprise fund, from additional fees to be charged for water usage. Based on this information, which of the following is a correct statement about the liability for these bonds?

Wähle eine der folgenden:

  • This liability is a general long-term liability.

  • This liability is not a liability of Jasper City. Therefore, it would not be reported in the basic financial statements but would be disclosed in the notes to the financial statements.

  • This liability is a Water Utility Fund liability.

  • This liability would be reported in the Governmental Activities column of the government-wide financial statements.

Erklärung

Frage 13 von 28

1

Which of the following is not a general long-term liability disclosure requirement?

Wähle eine der folgenden:

  • A schedule showing changes in long-term liabilities during the reporting period.

  • Information concerning the sources used to pay principal and interest.

  • Information about the amount of principal and interest due in future years.

  • Information on the amount of the general long-term liability due within one year.

Erklärung

Frage 14 von 28

1

Property owners in the City of Charleston pay property taxes that are earmarked, in part, to provide debt service for the outstanding debt of the city. Property owners in the city also provide debt service support for a share of the outstanding debt of Charles County and the Charleston Public School District, proportionate to the ratio of the assessed valuation of property located within the city to that of all taxable property in the county and the school district. The sum of the city's outstanding debt plus a proportionate share of the county and school district's debt is referred to as:

Wähle eine der folgenden:

  • Overlapping debt.

  • Legal debt margin.

  • Total direct debt.

  • Total general obligation debt outstanding.

Erklärung

Frage 15 von 28

1

The difference between the amount of the legal debt limit and the net amount of outstanding indebtedness subject to the limit is called the:

Wähle eine der folgenden:

  • Total direct debt.

  • Authorized debt.

  • Assessed valuation subject to limitation.

  • Debt margin.

Erklärung

Frage 16 von 28

1

A debt service fund is a:

Wähle eine der folgenden:

  • Fiduciary fund.

  • Governmental fund.

  • Special purpose fund

  • Proprietary fund.

Erklärung

Frage 17 von 28

1

Which of the following resource inflows would properly be classified as revenue of a debt service fund?

Wähle eine der folgenden:

  • Taxes collected by the General Fund and transferred to the debt service fund.

  • Receipt of the premium on a new bond issue.

  • Receipt of the interest earned on investments held in the debt service fund.

  • None of the other statments should be classified as revenue of the debt service fund.

Erklärung

Frage 18 von 28

1

Immediately after making its annual $30,000 lease payment on June 30, 2013, the last day of its fiscal year, a certain city had an unpaid capital lease obligation of $155,000. The interest rate applicable to the lease is 8 percent. When the $30,000 lease payment due on June 30, 2014, is made, the journal entry for the governmental activities accounts will include:

Wähle eine der folgenden:

  • A debit to Capital Lease Obligation Payable in the amount of $30,000.

  • A debit to Capital Lease Obligation Payable in the amount of $17,600.

  • A Credit to Cash in the amount of $30,000.

  • Both A debit to Capital Lease Obligation Payable in the amount of $17,600 and A Credit to Cash in the amount of $30,000 are correct.

Erklärung

Frage 19 von 28

1

Which of the following budgetary accounts is least likely to be included in the general ledger of a debt service fund?

Wähle eine der folgenden:

  • Encumbrances.

  • Appropriations.

  • Estimated Revenues.

  • Estimated Other Financing Sources.

Erklärung

Frage 20 von 28

1

GASB standards recommend the use of:

Wähle eine der folgenden:

  • A separate debt service fund for each debt to be serviced.

  • The General Fund for all but the most complicated debt service.

  • As few debt service funds as necessary, consistent with legal requirements.

  • Debt service funds for general obligation long-term debt and the General Fund for operating long-term debt.

Erklärung

Frage 21 von 28

1

On June 1, 2013, the City of Columbus issued $5,000,000 of 5 percent tax-supported bonds. The bonds mature in 10 years and pay interest semiannually on June 1 and December 1, beginning on December 1, 2013. For the fiscal year ending December 31, 2013, the amount of interest expenditures to be recognized in the debt service fund is:

Wähle eine der folgenden:

  • $0

  • $125,000.

  • $250,000.

  • Unable to calculate since it is unknown whether bonds were issued at premium or face.

Erklärung

Frage 22 von 28

1

Culver City issued $1,000,000 of special assessment bonds. The city has warranted to bondholders that it will make interest and principal payments should taxpayers in the special assessment district default on the debt. To make debt service payments on this debt, the City will require taxpayers in the special assessment district to pay $100,000 per year for 10 years, plus 5 percent interest on unpaid installments. The first installment of $100,000 and related interest payment of $50,000 is due on December 31, 2013, the end of the fiscal year. The entry to record the receipts of the first installment and related interest on December 31, 2013, will include a:

Wähle eine der folgenden:

  • Credit to Assessments Receivable—Current of $150,000 in the debt service fund.

  • Credit to Revenues of $50,000 in the debt service fund.

  • Credit to Assessment Receivable—Current of $150,000 in an agency fund.

  • Credit to Revenues of $50,000 in an agency fund.

Erklärung

Frage 23 von 28

1

Which of the following debt service fund accounts would not be closed at the end of each fiscal year?

Wähle eine der folgenden:

  • Fund Balance.

  • Expenditures—Bond Interest.

  • Revenues.

  • Estimated Revenues.

Erklärung

Frage 24 von 28

1

The City of Centralia issued $2,500,000 of Series B Refunding Bonds which, along with $700,000 of cash accumulated in a sinking fund, was used to redeem $3,200,000 of term bonds that had been outstanding for several years. To account for redemption of the term bonds will require a:

Wähle eine der folgenden:

  • Debit to Other Financing Uses in the amount of $2,500,000 in the debt service fund.

  • Debit to Expenditures in the amount of $700,000 in the debt service fund.

  • Debit to Term Bonds Payable in the amount of $3,200,000 in the governmental activities journal at the government-wide level.

  • All of the statements are correct.

Erklärung

Frage 25 von 28

1

Over the past 10 years, Fairfield Township has accumulated $1,500,000 in a sinking fund pursuant to the covenants on a term bond issue. According to GASB standards, long-term sinking fund investments must be reported at:

Wähle eine der folgenden:

  • Cost.

  • Lower of cost or market.

  • Fair value.

  • It depends on whether the investments are in equity or debt securities.

Erklärung

Frage 26 von 28

1

Which of the following financial statements would contain a column for a debt service fund that was determined to be a major fund?

Wähle eine der folgenden:

  • Statement of revenues, expenditures, and changes in fund balances—governmental funds.

  • Statement of cash flows—proprietary funds.

  • Statement of activities.

  • Statement of revenues, expenses, and changes in fund net position—proprietary funds.

Erklärung

Frage 27 von 28

1

A serial bond issue in which no principal is repaid for several years, but thereafter an equal amount of principal is repaid each year is called a (an):

Wähle eine der folgenden:

  • Regular serial bond issue.

  • Deferred serial bond issue.

  • Annuity serial bond issue.

  • Irregular serial bond issue.

Erklärung

Frage 28 von 28

1

An arrangement in which a city deposits cash or other assets in an irrevocable trust with an escrow agent to be used solely for satisfying future scheduled payments of both interest and principal of outstanding debt is known as a (an):

Wähle eine der folgenden:

  • Advance refunding.

  • Redemption in advance.

  • Legal defeasance.

  • In-substance defeasance.

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